Containing Group Health Insurance Costs

Focus: PERSONNEL MANAGEMENT

Do you shudder each year when you discover the school district’s annual health insurance premium?

As I settled into my superintendency in a small Ohio community, the treasurer informed me that the district budget held a 50 percent debt-to-income ratio in relation to the entire district budget. I had known of the general fund’s 25 percent debt-to-income ratio, but the health insurance liability was astonishing. Neither my doctoral training nor previous administrative experience touched on health insurance management, so I was rather befuddled. My treasurer also was unfamiliar with cost containment tactics, even though health care expenses constituted 15 percent of the annual budget.

Health care inflation rates had hovered around 15 percent annually. (Analysts currently project national health care expenses growing 5.5 percent a year through 2027.) In the unionized environment, the district repeatedly granted “rich” health plan provisions. Most telling, no one had executed due diligence by scrutinizing the insurance plan or investigating medical/prescription drug use, catastrophic claims or cost trends. Because the district was almost bankrupt, contracting a broker was irrational.